[Opinion] Do India’s 90-Plus DTAA Notifications Survive the ITA 2025 Repeal?

Bijoy Das – [2026] 186 taxmann.com 438 (Article)

The Section 536(2)(b) Savings Clause, CBDT Circular 789/2000’s Post-Repeal Status, Form 10F to Form 41 Migration, and Five Transitional DTAA Questions the ITA 2025 Has Left Unanswered

1. The Problem – A Silent Transitional Question With Rs. 50,000 Crore in Treaty Benefits at Stake

On 1 April 2026, the Income-tax Act, 1961 stood repealed by Section 536(1) of the Income-tax Act, 2025. With 536 sections, 16 schedules, and a comprehensive savings architecture under Section 536(2), the new Act was designed to ensure seamless transition. For most domestic provisions — assessment procedures, TDS mechanics, penalty frameworks, appellate pathways—the transition has been mapped by the CBDT FAQ of 25 April 2026 and by dozens of practitioner guides. One critical dimension of the transition, however, has received virtually no analytical attention – the fate of the notifications issued under Section 90(1) of the 1961 Act that gave domestic legal force to India’s 90-plus Double Taxation Avoidance Agreements.

Section 90(1) of the 1961 Act empowered the Central Government to enter into agreements with foreign countries and to give effect to such agreements ‘by notification in the Official Gazette.’ The Supreme Court in Assessing Officer (International Taxation) v. Nestle SA [2023] 155 taxmann.com 384 (SC)/[2024] 296 Taxman 580 (SC)/[2023] 458 ITR 756 (SC) held, in the context of MFN clauses, that such a notification is a mandatory condition precedent for a DTAA to operate in Indian domestic law—a treaty ratified at the international level but not notified under Section 90(1) has no domestic legal force. The ratio of Nestle SA, extended by the Sky High Quartet of ITAT rulings (Sky High Lxxix Leasing Co. Ltd. v. ACIT (IT) [2025] 179 taxmann.com 264 (Mumbai-Trib.) and companion rulings) to the MLI’s Principal Purpose Test, confirms that the notification mechanism is the statutory conduit through which international treaty law becomes operative in Indian tax administration.

Now that Section 90(1) of the 1961 Act has been replaced by Section 4(1) of the ITA 2025—a re-enactment with materially similar language but a different statutory home—the question is fundamental – do the 90-plus notifications issued under Section 90(1) of the 1961 Act automatically continue as notifications under Section 4(1) of the ITA 2025? Or does the repeal of the 1961 Act, even with the Section 536(2) savings clause, require fresh notifications under the new Act before India’s DTAAs are enforceable in domestic proceedings? This article addresses this question and five subsidiary transitional issues that flow from it.

2. Statutory Architecture—Section 90(1) of the 1961 Act vs Section 4(1) of the ITA 2025

Section 90(1) of the 1961 Act provided that the Central Government ‘may enter into an agreement with the Government of any country outside India or specified territory outside India for the granting of relief in respect of income on which have been paid both income-tax under this Act and income-tax in that country’ and, critically, may ‘by notification in the Official Gazette, make such provisions as may be necessary for implementing the agreement.’ The notification mechanism was both the instrument by which a treaty entered Indian domestic law and the source of the Assessing Officer’s authority to apply treaty rates and exemptions.

Section 4(1) of the ITA 2025, titled ‘Agreements with foreign countries or specified territories,’ replicates this architecture. The Central Government ‘may enter into an agreement with the Government of any country outside India or specified territory’ and ‘may, by notification, make such provisions as may be necessary for implementing the agreement.’ The language is substantively identical. The critical structural question is whether the continuity of the ‘agreement’ (i.e., the DTAA itself, an international instrument) also carries the continuity of the domestic ‘notification’ issued under the prior statute’s implementation provision.

The answer turns on Section 536(2)(b) of the ITA 2025, which provides that ‘all rights, privileges, obligations, and liabilities acquired, accrued, or incurred under the repealed Act’ shall be preserved. The question is whether a DTAA notification issued under Section 90(1) of the 1961 Act created a ‘right’ or ‘privilege’ under the repealed Act that is preserved by Section 536(2)(b)—or whether the notification was merely a procedural instrument that dies with the repeal of its enabling provision.

3. The Nestle SA Principle – Why the Notification Question Matters

The Supreme Court in Assessing Officer (International Taxation) v. Nestle SA [2023] 155 taxmann.com 384 (SC)/[2024] 296 Taxman 580 (SC)/[2023] 458 ITR 756 (SC) held that a DTAA provision (specifically, an MFN clause in a protocol) cannot operate in Indian domestic tax proceedings unless a specific notification under Section 90(1) has been issued to give it domestic legal force. The ratio was stated in broad terms – treaty provisions become enforceable in India through the notification mechanism; the treaty itself – ratified at the executive level through deposit of instruments – does not automatically constitute a notification. As the Supreme Court noted, the notification under Section 90(1) is the ‘mandatory condition’ for domestic enforceability.

The Sky High Lxxix Leasing Co. Ltd. (supra) and connected rulings on Kosi Aviation, Sunflower Aircraft Leasing, and Sky High Appeal XLIII) extended this ratio to the MLI’s PPT – holding that the MLI, ratified in 2019 and effective from 1 October 2019, has no domestic legal force because no DTAA-specific notifications were issued incorporating the MLI modifications. The India’s Ratification Notification (S.O. 2887(E) dated 09.08.2019) merely recorded India’s ratification; it did not reconstitute each Covered Tax Agreement to embed the MLI modifications.

Applying this principle to the ITA 2025 transition – if the DTAA notification under the old Section 90(1) is not carried forward by Section 536(2)(b), then by strict application of the Nestle SA ratio, India’s DTAAs would require fresh notifications under Section 4(1) of the ITA 2025 before they are enforceable in domestic proceedings for Tax Year 2026-27 onwards. This is not merely theoretical – it is the logical extension of a principle the Supreme Court established in a closely analogous context, deployed by the same Revenue apparatus that will conduct Tax Year 2026-27 assessments.